<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
FORM 10-Q
(MARK ONE)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1995 OR
________ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 0-17116
Lindsay Manufacturing Co.
(Exact name of registrant as specified in its charter)
Delaware 47-0554096
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Box 156, East Highway 91, Lindsay, Nebraska 68644
(Address of principal executive offices) (Zip Code)
402-428-2131
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No_____
Common Stock, $1.00 par value 4,518,728
Title of Class Outstanding as of March 14, 1995
Exhibit index is located on page 2.
Total number of pages 15
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<PAGE> 2
LINDSAY MANUFACTURING CO. AND CONSOLIDATED SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Consolidated Balance Sheets, February 28, 1995 and
1994 and August 31, 1994 3
Consolidated Statements of Operations for the three
months and six months ended February 28, 1995 and 1994 4
Consolidated Statements of Cash Flows for the six
months ended February 28, 1995 and 1994 5
Notes to Consolidated Financial Statements 6-8
Management's Discussion and Analysis of Results of
Operations and Financial Position 9-12
Part II - Other Information
Item 1. Legal Proceedings 12-13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index
4 - Specimen Form of Common Stock Certificate 13
11 - Statement re Computation of Per Share Earnings 15
</TABLE>
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<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Lindsay Manufacturing Co.
CONSOLIDATED BALANCE SHEETS
February 28, 1995 and 1994 and August 31, 1994
(in thousands, except share amounts)
<TABLE>
<CAPTION>
(Unaudited)
---------------------
February February August
1995 1994 1994
ASSETS ---------- ---------- ----------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.................................... $ 2,551 $ 1,670 $ 1,712
Marketable securities........................................ 10,383 11,907 11,927
Receivables.................................................. 15,056 15,746 11,080
Inventories.................................................. 7,672 6,019 6,248
Deferred income taxes........................................ 2,942 3,338 3,543
Other current assets......................................... 2,114 2,029 1,871
--------- --------- ---------
Total current assets....................................... 40,718 40,709 36,381
Long-term marketable securities................................ 41,917 36,909 45,378
Property, plant and equipment, net............................. 5,871 5,496 5,596
Other noncurrent assets........................................ 1,148 481 1,085
--------- --------- ---------
Total assets................................................... $ 89,654 $ 83,595 $ 88,440
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade...................................... $ 7,601 $ 7,437 $ 4,288
Other current liabilities.................................... 13,490 14,132 14,697
--------- --------- ---------
Total current liabilities.................................. 21,091 21,569 18,985
Other noncurrent liabilities................................... 1,251 650 1,371
--------- --------- ---------
Total liabilities.............................................. 22,342 22,219 20,356
--------- --------- ---------
Stockholders' equity:
Preferred stock, ($1 par value, 2,000,000 shares
authorized, no shares issued and outstanding in
February 1995 and 1994 and August 1994)..................
Common stock, ($1 par value, 10,000,000 shares
authorized, 4,820,558, 4,785,068 and 4,819,358 shares
issued and outstanding in February 1995 and 1994
and August 1994)......................................... 4,821 4,785 4,819
Capital in excess of stated value.......................... 3,850 3,187 3,841
Retained earnings.......................................... 65,745 54,723 60,743
Net unrealized holding gains............................... 2 0 0
Less treasury stock, (at cost, 301,830, 105,630 and 105,630
shares in February 1995 and 1994 and August 1994) (7,106) (1,319) (1,319)
--------- --------- ---------
Total stockholders' equity..................................... 67,312 61,376 68,084
--------- --------- ---------
Total liabilities and stockholders' equity..................... $ 89,654 $ 83,595 $ 88,440
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 4
Lindsay Manufacturing Co.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months and six months ended February 28, 1995 and 1994
(in thousands, except per share amounts)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
February February February February
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues.......................... $ 30,350 $ 27,558 $ 52,492 $ 53,123
Cost of operating revenues.................. 23,790 21,427 40,933 41,439
--------- --------- --------- ---------
Gross profit................................ 6,560 6,131 11,559 11,684
--------- --------- --------- ---------
Operating expenses:
Selling expense........................... 1,045 931 2,085 2,022
General and administrative expense........ 1,507 1,553 2,914 2,781
Engineering and research expense.......... 316 272 625 573
--------- --------- --------- ---------
Total operating expenses.................... 2,868 2,756 5,624 5,376
--------- --------- --------- ---------
Operating income............................ 3,692 3,375 5,935 6,308
Interest income, net........................ 672 526 1,354 1,071
Other income (expense), net................. 52 112 67 232
--------- --------- --------- ---------
Earnings before income taxes and cumulative
effect of accounting change.............. 4,416 4,013 7,356 7,611
Income tax provision........................ 1,413 1,282 2,354 2,398
--------- --------- --------- ---------
Earnings before cumulative effect of
accounting change........................ 3,003 2,731 5,002 5,213
Cumulative effect of change in accounting
for income taxes......................... 0 0 0 659
--------- --------- --------- ---------
Net earnings................................ $ 3,003 $ 2,731 $ 5,002 $ 5,872
========= ========= ========= =========
Earnings before cumulative effect of
accounting change per share.............. $ 0.64 $ 0.56 $ 1.04 $ 1.07
Cumulative effect of change in accounting
for income taxes per share............... 0.00 0.00 0.00 0.14
--------- --------- --------- ---------
Net earnings per share...................... $ 0.64 $ 0.56 $ 1.04 $ 1.21
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 5
Lindsay Manufacturing Co.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended February 28, 1995 and 1994
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
February February
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES ---------- ----------
<S> <C> <C>
Net earnings........................................................... $ 5,002 $ 5,872
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation........................................................ 618 613
Amortization of marketable securities premiums, net................. 178 131
(Gain) loss on sale of fixed assets................................. (39) 7
Loss on sale of marketable securities............................... 2 0
Provision for uncollectible accounts receivable..................... 30 30
Deferred income taxes............................................... 601 77
Cumulative effect of change in accounting for income taxes.......... 0 (659)
Changes in assets and liabilities:
Receivables......................................................... (4,006) (1,086)
Inventories......................................................... (1,424) (1,392)
Other current assets................................................ (243) (154)
Accounts payable.................................................... 3,313 (295)
Other current liabilities........................................... (1,101) (2,106)
Current taxes payable............................................... (106) 299
Other noncurrent assets and liabilities............................. (183) (167)
--------- ---------
Net cash flows provided by operating activities........................ 2,642 1,170
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment............................. (900) (582)
Proceeds from sale of property, plant and equipment.................... 46 46
Purchases of marketable securities..................................... 0 (9,945)
Proceeds from sale and maturities of marketable securities............. 0 8,960
Purchases of marketable securities held-to-maturity.................... (5,316) 0
Proceeds from sale of marketable securities held-to-maturity........... 2,998 0
Proceeds from maturities of marketable securities held-to-maturity..... 7,145 0
--------- ---------
Net cash flows provided by (used in) investing activities.............. 3,973 (1,521)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock under stock option plan......... 11 20
Purchases of treasury stock............................................ (5,787) 0
--------- ---------
Net cash flows provided by (used in) financing activities.............. (5,776) 20
--------- ---------
Net increase (decrease) in cash and cash equivalents................... 839 (331)
Cash and cash equivalents, beginning of period......................... 1,712 2,001
--------- ---------
Cash and cash equivalents, end of period............................... $ 2,551 $ 1,670
========= =========
Supplemental Cash Flow Information:
Income taxes paid...................................................... $ 1,923 $ 2,050
Interest paid.......................................................... $ 5 $ 0
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 6
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
The consolidated financial statements included herein are presented in
accordance with the requirements of Form 10-Q and consequently do not include
all of the disclosures normally required by generally accepted accounting
principles or those normally made in the registrant's annual Form 10-K filing.
These consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Lindsay Manufacturing
Co. (Lindsay) August 31, 1994 Annual Report to Stockholders.
In the opinion of management the unaudited consolidated financial statements
of Lindsay reflect all adjustments of a normal recurring nature necessary to
present a fair statement of the results of operations for the respective
interim periods. The results for interim periods are not necessarily
indicative of trends or results expected for a full year.
2. Cash Equivalents, Marketable Securities and Long-Term Marketable Securities
Cash equivalents are included at cost, which approximate market. Marketable
securities and long-term marketable securities are categorized as
held-to-maturity or available-for-sale. Investments in the held-to-maturity
category are carried at amortized cost. Investments in the available-for-sale
category are carried at fair value with unrealized gains and losses separate as
a separate component of stockholders' equity. Lindsay considers all highly
liquid investments with maturities of three months or less to be cash
equivalents, while those having maturities in excess of three months are
classified as marketable securities or as long-term marketable securities when
maturities are in excess of one year. Marketable securities and long-term
marketable securities consist of investment-grade municipal bonds.
Lindsay adopted Statement of Financial Accounting Standards (SFAS) 115
"Accounting For Certain Investments in Debt and Equity Securities" September 1,
1994. At September 1, 1994 and the quarter ended November 30, 1994, all
investments in debt securities were classified as held-to-maturity and carried
at amortized cost. The impact of adopting SFAS 115 resulted in no effect to
stockholders' equity or earnings.
During the quarter ended February 28, 1995, Lindsay's board authorized the
repurchase of an additional 750,000 shares of its common stock. Large blocks
of shares became available in the second quarter and were repurchased partially
with the proceeds of the sale of securities maturing June 15, 1995 and
September 1, 1995 from the held-to-maturity portfolio. The total amortized
cost, realized gain and realized loss for sales from securities classified as
held-to-maturity were $3,000,000, $1,500 and $3,750. In order to provide
flexibility for future repurchases of its common stock, Lindsay transferred
securities maturing July 1, 1995 from the held-to-maturity classification to
the available-for-sale classification. The total amortized cost, gross
unrealized holding gains, gross unrealized holding losses and the aggregate
fair value for the transfer are $3,749,000, $4,000, $2,000 and $3,751,000
respectively. Lindsay anticipates that future purchases of its common stock
will be funded out of cash equivalents, available-for-sale securities and cash
flow from operations.
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<PAGE> 7
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Investments in the held-to-maturity category are included in Marketable
securities ($6,632,000) and Long-term marketable securities ($41,917,000). The
total amortized cost, gross unrealized holding gains, gross unrealized holding
losses, and aggregate fair value for held-to-maturity securities are
$48,549,000, $29,000, $497,000 and $48,081,000, respectively. In the
held-to-maturity category, $6,632,000 in securities mature within one year and
$41,917,000 million have maturities ranging from one to three and one-half
years.
3. Income Tax Provision
The Company changed its method of accounting for income taxes from the deferred
method to the liability method required by SFAS 109 in fiscal 1994. This new
standard requires that a deferred tax be recorded to reflect the tax expense
(benefit) resulting from the recognition of temporary differences. Temporary
differences are differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements that will result in
differences between income for tax purposes and income for financial statement
purposes in future years. This standard was adopted September 1, 1993, using
the cumulative catch-up method and increased the first quarter ended November
30, 1993 earnings by $659,000 or $0.14 per share. Management does not believe
there are uncertainties surrounding realization of the net deferred tax asset.
4. Inventories
Inventories are stated at the lower of cost or market. Cost is determined by
the last-in, first-out (LIFO) method for all inventories.
<TABLE>
<CAPTION>
(in thousands)
------------------------------------
February February August
1995 1994 1994
---------- ---------- ----------
<S> <C> <C> <C>
Total manufactured goods
First-in, first-out inventory $11,860 $10,411 $10,291
LIFO reserves (3,460) (3,656) (3,283)
Obsolescence reserve (728) (736) (760)
------- ------- -------
Total inventories $ 7,672 $ 6,019 $ 6,248
======= ======= =======
</TABLE>
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<PAGE> 8
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The estimated percentage distribution between major classes of inventory before
reserves is as follows:
<TABLE>
<CAPTION>
February February August
1995 1994 1994
---------- ---------- ----------
<S> <C> <C> <C>
Raw materials 21% 15% 21%
Work in process 6% 9% 6%
Purchased parts 20% 26% 20%
Finished goods 53% 50% 53%
</TABLE>
5. Property, Plant and Equipment
Property, plant and equipment are stated at cost.
<TABLE>
<CAPTION>
(in thousands)
------------------------------------
February February August
1995 1994 1994
---------- ---------- ----------
<S> <C> <C> <C>
Land $ 66 $ 66 $ 66
Buildings 4,183 4,183 4,183
Equipment 17,256 16,816 17,084
Other 2,475 1,724 1,880
------- ------- -------
23,980 22,789 23,213
Less accumulated depreciation 18,109 17,293 17,617
------- ------- -------
Property, plant and equipment, net $ 5,871 $ 5,496 $ 5,596
======= ======= =======
</TABLE>
6. Credit Arrangements
A $7.5 million unsecured revolving line of credit through April 1, 1995 to be
used for working capital and general corporate purposes expired during the
quarter ended February 28, 1995 due to an accelerated expiration date agreed
upon by Lindsay and the bank. There had been no borrowings under this
unsecured revolving line of credit. Lindsay intended not to renew this line of
credit after its scheduled April 1, 1995 expiration date.
7. Net Earnings Per Share
Primary net earnings per share are calculated by dividing the earnings by the
weighted average number of common and common equivalent (stock options) shares
outstanding of 4,720,771 for the three months and 4,792,261 for the six months
ended February 28, 1995 as compared to 4,859,205 for the three months and
4,858,039 for the six months ended February 28, 1994. The difference between
shares for primary and fully diluted earnings per share was not significant in
any period.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following table provides highlights for the three month and six month
periods indicated of Fiscal Year 1995 as compared to the same periods of Fiscal
Year 1994.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------- --------------------------------
Percent Percent
Increase Increase
($ in thousands) 2/28/95 2/28/94 (Decrease) 2/28/95 2/28/94 (Decrease)
- ---------------------------------------------------------------------------------------------------------------
Consolidated
- ------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues ..................... $30,350 $27,558 10.1% $52,492 $53,123 (1.2)%
Cost of Operating Revenues ............. $23,790 $21,427 11.0 $40,933 $41,439 (1.2)
Gross Profit ........................... $ 6,560 $ 6,131 7.0 $11,559 $11,684 (1.1)
Gross Margin ........................... 21.6% 22.3% 22.0% 22.0%
Selling, Eng. & Research, and
G&A Expense .......................... $ 2,868 $ 2,756 4.1 $ 5,624 $ 5,376 4.6
Operating Income ....................... $ 3,692 $ 3,375 9.4 $ 5,935 $ 6,308 (5.9)
Operating Margin ....................... 12.2% 12.3% 11.3% 11.9%
Interest Income, net ................... $ 672 $ 526 27.8 $ 1,354 $ 1,071 26.4
Other Income (Expense), net ............ $ 52 $ 112 (53.6) $ 67 $ 232 (71.1)
Income Tax Provision ................... $ 1,413 $ 1,282 10.2 $ 2,354 $ 2,398 (1.8)
Effective Income Tax Rate .............. 32.0% 32.0% 32.0% 31.5%
Earnings Before Cumulative Effect
of Accounting Change ................. $ 3,003 $ 2,731 10.0 $ 5,002 $ 5,213 (4.1)
Cumulative Effect of Accounting
Change For Income Taxes .............. $ 0 $ 0 N/A $ 0 $ 659
Net Earnings............................ $ 3,003 $ 2,731 10.0% $ 5,002 $ 5,872 (14.8)%
</TABLE>
As the above table displays, operating revenues for the three month period
ended February 28, 1995 increased 10.1 percent ($2.8 million) from its
comparable period of the prior year. For the six month period ended February
28, 1995, operating revenues were 1.2 percent lower ($0.6 million). The
increase in second quarter revenue was the net result of a 13 percent ($2.6
million) increase in North American irrigation equipment revenues and a 43
percent ($2.0 million) increase in diversified products and other revenues
being partially offset by a $1.8 million decrease in export irrigation
equipment revenue. For the first six months of fiscal 1995, North American
irrigation equipment and diversified product and other revenues were up 14
percent ($4.4 million) and 36 percent ($3.5 million), respectively, as compared
to the first six months of the prior year. Export irrigation equipment
revenues for the six month period were down 71 percent ($8.5 million).
North American irrigation equipment revenues for both the three and six month
periods of fiscal 1995 were favorably impacted by a continued farmer emphasis
on conserving water, energy, labor, and favorable weather patterns for the 1994
fall harvest. At the same time, higher interest/financing rates, lower
agricultural commodity prices (except for cotton and wheat), and projections of
lower net cash farm income negatively impacted 1995 demand.
Export irrigation equipment revenues for both the three and six month periods
of fiscal 1995 were negatively impacted by lower sales to our irrigation
equipment dealers in Saudi Arabia.
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<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
Increases in diversified products and other revenues for both the three and six
month periods of fiscal 1995 were due to increased sales of both large diameter
steel tubing and of outsource manufactured products. Lindsay's primary
outsource manufacturing customers continue to be Caterpillar, Inc., Deere &
Company, and New Holland North America, Inc.
Gross margin for the three months ended February 28, 1995, as a percent of
operating revenues was 21.6 percent as compared to 22.3 percent of the prior
year's comparative period. For the six months ended February 28, 1995, gross
margin as a percent of operating revenues was 22.0 percent, equal to that of
the six months ended February 28, 1994. Relatively strong demand for
irrigation equipment in the North American market for both the three and six
month periods resulted in a continued favorable pricing environment. However,
raw material costs were up during both the three and six month periods of the
current year primarily due to higher steel, zinc, electrical cable, and tire
costs.
Selling, general and administrative, and engineering and research expenses for
the three month period ended February 28, 1995, were $2.9 million, nominally
higher than $2.8 million of the prior year's comparative period. For the six
month period, fiscal 1995 selling, general and administrative, and engineering
and research expenses totaled $5.6 million as compared to $5.4 million in
fiscal 1994.
The effective tax rates for the three month and six month periods ended
February 28, 1995 was 32.0 percent. This compares to an effective tax rate of
32.0 and 31.5 percent, respectively, for the comparable three month and six
month periods of the prior year. Due to the tax free status of interest earned
on municipal bonds (for federal income tax purposes) and to a lesser extent the
Foreign Sales Corporation Federal tax provisions as they relate to export
sales, Lindsay continues to benefit from an effective tax rate that is lower
than the combined federal and state statutory rates (currently estimated at
39.2 percent).
FINANCIAL CONDITION
Lindsay's equity decreased to $67.3 million at February 28, 1995 from $68.1
million at August 31, 1994, due to its net earnings of $5.0 million, less $5.8
million used to repurchase 196,200 shares of common stock per Lindsay's
previously announced stock repurchase plan. Lindsay's equity at February 28,
1994 was $61.4 million.
Lindsay's cash and short-term marketable securities totaled $12.9 million at
February 28, 1995, as compared to $13.6 million at August 31, 1994, and
February 28, 1994. Receivables of $15.1 million at February 28, 1995 increased
$4.0 million from $11.1 million at August 31, 1994 due to the higher level of
North American irrigation equipment sales activity during February 1995.
February 28, 1995 receivables are nominally lower ($0.6 million) from their
$15.7 million balance at February 28, 1994. Inventories of $7.7 million at
February 28, 1995 increased $1.4 million from $6.2 million at August 31, 1994,
and were $1.7 million higher from $6.0 million at February 28, 1994.
Inventories are continuing at an acceptable level due to increased sales
activity and order backlog. At February 28, 1995, Lindsay had $41.9 million
-10-
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
invested in long-term marketable securities which represent intermediate term
(one to three year maturities) municipal debt. This is down from $45.4 million
at August 31, 1994 and up from $36.9 million at February 28, 1994.
Noncurrent assets at February 28, 1995 and at August 31, 1994 totaled $1.1
million, higher than their $0.5 million balance at February 28, 1994. Other
noncurrent liabilities at February 28, 1995 and August 31, 1994 totaled $1.3
million and $1.4 million, respectively, higher than their $0.7 million balance
at February 28, 1994 primarily due to an adjustment required to recognize the
minimum liability related to Lindsay's supplemental retirement plan.
Current liabilities of $21.1 million at February 28, 1995 are higher than their
$19.0 million balance at August 31, 1994 and lower than their $21.6 million
balance at February 28, 1994. The increase from August 31, 1994 is principally
due to increased trade payables and accruals for international dealer
commissions partially offset by lower accruals for retirement plans, warranty
and environmental remediation. The decrease from February 28, 1994 is
primarily due to lower accruals for taxes payable, warranty and environmental
remediation partially offset by higher accruals for international dealer
commissions.
Capital expenditures totaling $0.9 million for the first six months of 1995
were used primarily for upgrading manufacturing plant equipment. Lindsay
expects its 1995 capital expenditures to be approximately $1.5 to $2.0 million
which will be used principally to improve Lindsay's existing facilities and
expand its manufacturing capabilities.
Lindsay believes its capitalization (including cash and marketable securities
balances) and operating cash flow are sufficient to cover expected working
capital needs, planned capital expenditures and repurchase of common stock.
SEASONALITY
Irrigation equipment sales are seasonal by nature. Farmers generally order
systems to be delivered and installed before the growing season. Shipments to
North American customers usually peak during March and April for the spring
planting period. Lindsay's expansion into diversified products complements its
irrigation operations by using available capacity and reducing seasonality.
OTHER FACTORS
Lindsay's domestic and international irrigation equipment sales are highly
dependent upon the need for irrigated agricultural production, which, in turn,
depends upon many factors, including total worldwide crop production,
profitability of agricultural production, commodity prices, aggregate net farm
income, governmental policies regarding the agricultural sector, water and
energy conservation policies, and regularity of rainfall.
Approximately 7 and 22 percent of Lindsay's operating revenues for the first
six months of 1995 and 1994 respectively, were generated from export sales. For
the full year of 1994, approximately 14 percent of Lindsay's operating revenues
were generated from export sales. Lindsay does not believe it has significant
exposure to foreign currency translation risks. Lindsay's export sales are all
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<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
in U.S. dollars and are generally all shipped against prepayments or backed by
irrevocable letters of credit which are confirmed by U.S. banks.
Part II
OTHER INFORMATION
Item 1. Legal Proceedings
Lindsay is a party to a number of lawsuits arising from environmental and other
issues in the ordinary course of its business. Management does not believe
that these lawsuits, either individually or in the aggregate, are likely to
have a material adverse effect on Lindsay's financial condition, results of
operations or cash flows.
Environmental contamination at Lindsay's manufacturing facility occurred in
1982 when a drill, operated by a sub-contractor installing groundwater
monitoring wells, punctured a silt and sand lens and an underlying clay layer
beneath a clay-lined lagoon. The 1982 puncture of the clay layer caused acid
and solvent leachate to enter the sand and gravel aquifer.
Since 1983, Lindsay has worked actively with the Nebraska Department of
Environmental Control ("NDEC") to remediate this contamination by purging and
treating the aquifer. In October 1989, the Environmental Protection Agency
("EPA") added Lindsay to the list of priority Superfund sites. In 1988, a
sampling which was performed in connection with an investigation of the extent
of aquifer groundwater contamination, revealed solvent contamination (volatile
organic compounds) in the soil and shallow groundwater in three locations at
and in the vicinity of the plant. Under a 1988 agreement with the EPA and
NDEC, Lindsay conducted a Remedial Investigation/Feasibility Study ("RI/FS").
This study was completed in June 1990. Lindsay does not believe that there is
any other soil or groundwater contamination at the manufacturing facility.
In September 1990, the EPA issued its Record of Decision ("ROD") selecting a
plan for completing the remediation of both contaminations. The plan selected
for aquifer remediation was in line with Lindsay's expectations. However, the
plan for remediation of the soil and shallow groundwater contamination proposed
a higher degree of remediation than the company had previously expected.
Therefore, Lindsay recognized an additional $2.9 million accrual in the fourth
quarter of Fiscal 1990. The selected plan implementation was delayed until
finalization of the Consent Decree in April 1992. Due to this delay, Lindsay
recognized an additional accrual of $0.6 million in the fourth quarter of
Fiscal 1991 and $0.8 million in the fourth quarter of Fiscal 1992. The final
remediation plans were approved in 1993 and 1994 and the remediation plans are
partially implemented.
The total balance sheet reserve for this remediation was $2.2 million at
February 28, 1995 compared to $2.9 million at August 31, 1994, reflecting
expenditures of $0.7 million during Fiscal 1995 for the continued
implementation of the plans.
-12-
<PAGE> 13
OTHER INFORMATION
(Continued)
Lindsay believes that the current reserve is sufficient to cover the estimated
total cost for complete remediation of both the aquifer and soil and shallow
groundwater contaminations under the final plans. Lindsay believes that its
insurer should cover costs associated with the contamination of the aquifer
that was caused by the puncture of the clay layer in 1982. However, Lindsay
and Lindsay's insurance carrier are in litigation over the extent of the
insurance coverage. If the EPA or the NDEC require remediation which is in
addition to or different from the current plan or if Lindsay is not successful
in its litigation against its insurance carrier, this reserve could increase or
decrease depending on the nature of the change in events.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
4 - Specimen Form of Common Stock Certificate incorporated by reference
to Exhibit 4 of Amendment No. 3 to the Company's Registration
Statement on Form S-1 (Registration No. 33-23084), filed September
23, 1988.
11 - Statement re Computation of Per Share Earnings.
(b) Reports on Form 8-K -
No Form 8-K was filed during the quarter ended February 28, 1995.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LINDSAY MANUFACTURING CO.
Date: March 20, 1995 Gary D. Parker
---------------------------------
Gary D. Parker
Chairman, President and Chief Executive Officer
Date: March 20, 1995 Bruce C. Karsk
---------------------------------
Bruce C. Karsk
Vice President - Finance, Treasurer and Secretary;
Principal Financial and Accounting Officer
Date: March 20, 1995 Ralph J. Kroenke
---------------------------------
Ralph J. Kroenke
Controller
-14-
<PAGE> 1
EXHIBIT 11
Lindsay Manufacturing Co.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
COMPUTATION OF PRIMARY AND FULLY DILUTED SHARES
For the three months and six months ended February 28, 1995 and 1994
(Dollars in thousands except per share amounts)
(Unaudited)
COMPUTATION OF PRIMARY PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
February February February February
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1. Weighted average shares outstanding........ 4,571,740 4,679,361 4,642,734 4,678,542
2. Net additional shares outstanding assuming
dilutive stock options exercised and
proceeds used to purchase treasury stock 149,031 179,844 149,527 179,497
----------- ----------- ----------- -----------
3. Average number of common and common
equivalent shares outstanding........... 4,720,771 4,859,205 4,792,261 4,858,039
=========== =========== =========== ===========
4. Net earnings for per share computation..... $ 3,003 $ 2,731 $ 5,002 $ 5,872
=========== =========== =========== ===========
5. Net earnings per average common and common
equivalent shares outstanding........... $ 0.64 $ 0.56 $ 1.04 $ 1.21
=========== =========== =========== ===========
</TABLE>
COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
February February February February
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1. Weighted average shares outstanding........ 4,571,740 4,679,361 4,642,734 4,678,542
2. Net additional shares outstanding assuming
dilutive stock options exercised and
proceeds used to purchase treasury stock 149,031 180,930 150,338 180,930
----------- ----------- ----------- -----------
3. Average number of common and common
equivalent shares outstanding........... 4,720,771 4,860,291 4,793,072 4,859,472
=========== =========== =========== ===========
4. Net earnings for per share computation..... $ 3,003 $ 2,731 $ 5,002 $ 5,872
=========== =========== =========== ===========
5. Net earnings per average common and common
equivalent shares outstanding........... $ 0.64 $ 0.56 $ 1.04 $ 1.21
=========== =========== =========== ===========
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> FEB-28-1995
<CASH> 2,551
<SECURITIES> 10,383
<RECEIVABLES> 15,056
<ALLOWANCES> 0
<INVENTORY> 7,672
<CURRENT-ASSETS> 40,718
<PP&E> 23,980
<DEPRECIATION> 18,109
<TOTAL-ASSETS> 89,654
<CURRENT-LIABILITIES> 21,091
<BONDS> 0
<COMMON> 4,821
0
0
<OTHER-SE> 62,491
<TOTAL-LIABILITY-AND-EQUITY> 89,654
<SALES> 52,492
<TOTAL-REVENUES> 52,492
<CGS> 40,933
<TOTAL-COSTS> 40,933
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,356
<INCOME-TAX> 2,354
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,002
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
</TABLE>
